The document summarizes petrol and diesel prices in India in 2008. It notes that in July-August 2008, crude oil prices were around $140 per barrel but fell to $38 per barrel in December 2008. It calculates the production costs of petrol and diesel from crude oil and estimates the retail prices if government fixed prices based on actual costs. However, the government was reluctant to do so because lower fuel prices would reduce tax revenue for the government at a time when the economy was slowing and other tax revenues were declining.

1. Petrol, diesal and dollar By Prof.Augustin Amaladas M.Com., AICWA., PGDFM.,B.Ed.

2. History #Crude oil cost in July to August 2008-$140 range #1US dollar was equal to Rs.42(Approximately) #1 barrel crude Oil = 190 litres. # with 1 barrel of crude oil companies can produce 28-29 litres of petrol and 85 litres of diesal(Approximately) Normal loss =190-29-85 =76 litres

3. Calculation in Indian Rupee 1 barrel costed the country in August Rs.5880 ($140 x Rs.42) Refinery charges etc. 1 litre of petrol costs about Rs.11 and diesel Rs.13.

4. New market trends December 2008 price-$38 per barrel 1$ = Rs.50 Total costs =Rs.1900 Share of costs based on current sale value 50 x 28 :35 x85 1400:2975 Petrol costs Rs.608 and diesel costs Rs.1292 Cost per litre of petrol Rs.21.71; diesel Rs.15.2 Levis on petrol and margin of dealer (50%) Rs.10.85 and on diesel Rs.7.6 per litre

5. Price can be fixed by government Petrol Rs.21.71 + Rs.10.85=Rs.32.56 Diesel Rs.15.2 +Rs.7.6=Rs.22.8 Why government is reluctant to fix at this price?

6. Reasons 1. When economy is not doing well according to Keyn’s theory the Government has to spend on infra structure so that it can revive the economy. In order to spend government require money. All the industries are not working well. Income from such sources are already reduced.If collection from petrol and diesel are reduced the inflow of cash to government will be reduced.